Indie Booksellers Sue Amazon, Big Six over E-book DRM

by Jim Milliot
|

Feb 20, 2013

It’s been a while since booksellers sued publishers but that’s what’s just happened as three independent bookstores have filed an antitrust class action lawsuit against the big six houses and Amazon charging that by signing agreements that call for the use of DRM on e-books sold through the Kindle, the online retailer and the publishers have combined to restrict the sale of e-books. The complaint, filed in the U.S. District Court for the Southern District of New York, contends that while Amazon and Random House, Penguin, HarperCollins, Simon & Schuster, Hachette Book Group, and Macmillan signed contracts with Amazon for the sale of e-books with DRM that was “specifically designed to limit the use of digital content” to various Kindle devices, the publishers have not entered into any agreements with independent bricks-and-mortar or independent collectives to sell e-books. “Consequently,” the complaint states, “the vast majority of readers who wish to read an e-book published by the Big Six will purchase the e-book from Amazon.”

The three named plaintiffs are The Book House of Stuyvesant Plaza of Albany, N.Y.; Fiction Addiction of Greenville, S.C.; and Posman Books of New York City. The rest of the class, the complaint states are the “hundreds” of independent brick-and-mortar independent bookstores who sell e-books.

The bookstores are asking the court to issue an injunction prohibiting the publishers and Amazon from “selling e-books with device and app specific DRMs,” while also requiring the big six publishers to allow independent bookstores to directly sell open-source DRM e-books, though it's not clear what the complaint means by open-source DRM. The suit also seeks an injunction preventing Amazon from selling DRM specific, or non-open-source, dedicated e-readers, alternative e-reader devices, and apps.

Among the issues the suit, filed by Creizman PLLC of New York and Blecher & Collins of Los Angeles, asks the court to examine are whether the publishers and Amazon entered into a series of contracts which "unreasonably retain trade and commerce" in the e-book market, and whether Amazon has unlawfully monopolized or attempted to monopolize the e-book market.

While Amazon clearly has the largest share of the e-book market, booksellers can sell e-books that are used on other devices, and the ABA has a deal with Kobo that allows booksellers to sell Kobo devices and e-books that have DRM. The only publisher to comment by Thursday morning was Simon & Schuster whose spokesperson issued the following statement: “We believe the case is without merit or any basis in the law and intend to vigorously contest it. Furthermore, we believe the plaintiff retailers will be better served by working with us to grow their business rather than litigating." In a comment sent Thursday afternoon, HBG called the suit "absolutely without merit," and expressed its bewilderment and why booksellers would take such a stance in a statement: "Hachette Book Group has actively participated in many digital initiatives sponsored by the ABA for the benefit of Indies. We did not take any actions to harm bookstores and Hachette has a strong and long-standing record of support for brick-and-mortar shops, so we are surprised and disappointed that a handful of customers would make these unfounded charges (confusingly, one of the plaintiffs filed a formal comment supporting the very publishers named in this new suit, in the recent DOJ settlement). There are no factual allegations that Hachette colluded with any other publisher, and the wild suggestion that Hachette colluded with Amazon belies any knowledge of the industry over the past few years. We will contest this dubious action vigorously."

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